Massachusetts Ramps Up Diversity Guidelines

The state’s PRIM Board will vote against nominees if less than 35% of the board is diverse in terms of gender and race.

Massachusetts’ Pension Reserves Investment Management (PRIM) Board will have new proxy voting guidelines to follow when it’s time for members to provide their opinion as shareholders in their portfolio companies.

The guidelines, proposed by Treasurer Deborah Goldberg, represent the latest step in an increasingly stringent pattern of rules set forth by PRIM in proxy voting. Companies are now expected to have 35% of their board comprised of women and people of color, an increase from a 2017 rule that required companies to have 30%. The board passed an initial requirement of 25% in 2015. PRIM will vote against board nominees if the 35% level is not reached.

Additionally, PRIM will vote for shareholder proposals banning guns on company property, except for security-related issues, and vote for proposals that explicitly prohibit discrimination on the basis of disability.

MassPRIM has relatively progressive shareholder voting guidelines, littered with rules tasking the board to vote for sustainability-friendly policies such as environmental, social, and governance (ESG). The organization is tasked to “generally vote for requests for reports on the feasibility of developing renewable energy resources,” vote for increased investment in renewable energy resources, and vote for proposals calling for the reduction of greenhouse gas emissions. The organization’s doctrine also states to vote against proposals that seek to eliminate protections already offered to lesbian, gay, bisexual, transgender, and queer employees.

MassPRIM also takes part in a diversity-inclined coalition made up of peer institutional investors called the Northeast Investors’ Diversity Initiative that pushes for like-minded diversity among corporate governance “inclusive of gender, race, and ethnicity at companies headquartered in the Northeast.” The group is made up of the state treasurers of Rhode Island, Connecticut, Maine, Vermont, Massachusetts, and New York.

MassPRIM holds more than $76 billion in assets and is a voting shareholder in more than 11,000 companies.

“The pension fund invests billions of dollars in publicly traded companies, and we want to do all we can to ensure these organizations are following best practices,” Goldberg said in a statement. “Encouraging diversity, preventing workplace violence, and protecting employees from discrimination is not only good for the people who work at these companies, but it is good for business and their bottom line.”

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